'Discounts help families' - Woolies fires back

Woolworths boss Grant O’Brien has defied calls by the competition regulator to shut down its heavily discounted petrol shopper docket schemes, arguing the retailer is offering huge help to families as they balance their household budgets.

The entrenched position now taken by both sides, the nation’s biggest supermarket chain and the Australian Competition and Consumer Commission, has intensified the heat around the issue and could mean an eventual court case to decide the matter could be a likely outcome.

Addressing investors on the release of Woolworths’ sales results for fiscal 2013, Mr O’Brien said his petrol shopper dockets discount were here to stay.

‘‘No one has come to me and said stop doing what you are doing, and nor do I expect anyone to,’’ Mr O’Brien said. ‘‘Customers have been benefiting from this and have done for a decade and a half and will continue to benefit going forward especially in this environment where there is such pressure on household budgets.

‘‘How can it be a bad thing to to have discounts?’’

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The war of words comes as ACCC chairman Rod Sims yesterday fired a salvo at Woolworths, and the No.2 supermarket chain Coles, for their increasingly generous fuel discount schemes - with one from Woolworths recently offering a 45 cents per litre discount - warning the shopper docket schemes may actually push up the price of petrol and create an unassailable duopoly similar to that enjoyed by the supermarket giants.

''If these shopper dockets continue at these levels it's going to be very hard for other players to compete, and we may just end up with two players in the country selling petrol, which is not going to be in your interest,'' Mr Sims told a business lunch yesterday.

Stopping short of seeking a court injunction or labelling the fuel discount schemes a breach of the law, Mr Sims did argue the supermarkets should keep their discount promotions within the supermarket aisles.

''If Coles and Woolworths wish to offer their customers a discount, it should be off supermarket products, not petrol.’’

But Mr O’Brien refused to yield this afternoon or bend to the wishes of the ACCC.

‘‘We have not sat down and thought about anything other than providing value for our customers through our current petrol offer and our current food and promotional offers,’’ Mr O’Brien said.

It has provided greater value to customers and value that they are happy with - they vote with their feet.

He dismissed an argument put by Mr Sims the fuel discounts might provide short-term benefits to some consumers but could harm other fuel retailers and lessen competition in petrol retailing.

‘‘They are judgements the ACCC will no doubt make, the point I would make is fuel discounts have been in place for 17 years in Woolworths so it’s not new and offering customers discounts and in particular rewarding our loyal customers with discounts is something that has been going on for a long time.

‘‘It has provided greater value to customers and value that they are happy with - they vote with their feet.’’

He said a recent offer of 45 cents per litre discount was only to a limited number of loyal customers and for a limited amount of time. He said it was not unusually high compared to other discounts offered in the last 17 years.

Discounts blamed for closures

Politicians, retailers and service station owners have long attacked Woolworths and Coles for their increasingly steep fuel discount promotions, arguing everything from a conspiracy by the chains to pump up the price of petrol to their cross-subsidising of losses on petrol by jacking up the price of their groceries.

The chief executive of the Australasian Convenience and Petroleum Marketers Association, Nic Moulis, said the supermarkets were using income from higher prices for some grocery items to subsidise their fuel discounts.

''We also feel the large discounts on offer are selling fuel below cost, below the price most independent operators can buy fuel at,'' he said.

Mr Moulis blamed the closure of 1000 service stations since 2009 partly on the proliferation of fuel discount schemes by the supermarket chains.

Australian Automobile Association executive director Andrew McKellar called the shopper dockets a ''pea and thimble trick''.

''While consumers are getting a discount at the petrol pump, they probably more than pay for that in their weekly grocery bill,'' Mr McKellar said.

Careful response in Canberra

The ACCC's warning to the supermarket chains received a careful response from the major parties. A spokesman for Competition Policy and Consumer Affairs Minister David Bradbury said the federal government would let the ACCC investigation take its course.

"The ACCC has indicated that it is currently investigating a range of petrol market issues, including the use of ‘shopper dockets’. The government will await the outcome of those investigations," he said.

Opposition Leader Tony Abbott said Mr Sims was right to be concerned about petrol price competition, but said the Coalition would not make any promises in the area. "A lot of politicians over the years have made a lot of promises on petrol prices," he told Fairfax Radio. "So I'm not going to make big promises."

The Coalition has already committed to a "root and branch" review of Australia's competition laws.

NSW Nationals senator John Williams, who has previously raised the issue of petrol prices with the ACCC, said he was "cautiously optimistic" that substantial shopper docket petrol discounts might become a "thing of the past". He said parliament should wait for the ACCC investigation to wrap up before deciding if the watchdog needed more powers.

On Monday, independent Independent senator Nick Xenophon attacked existing competition laws for being weak and ineffective and called for new legislation to deal with the petrol price issue.

He said he planned to draft legislation that would allow the ACCC to issue infringement notices under competition law, to provide relief to small business retailers.

Senator Xenophon said there was a gap in the existing legislation that meant the ACCC can only issue infringement notices under consumer law.

He told Fairfax Media today he would keep advocating for change when parliament came back.

"The major parties may be lukewarm on my suggestion but this is a red hot issue around the country," he said. "This is about fairness."